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Should You Worry About Transocean Ltd.'s (NYSE:RIG) CEO Pay?

Simply Wall St

Jeremy Thigpen has been the CEO of Transocean Ltd. (NYSE:RIG) since 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Transocean

How Does Jeremy Thigpen's Compensation Compare With Similar Sized Companies?

According to our data, Transocean Ltd. has a market capitalization of US$3.6b, and pays its CEO total annual compensation worth US$8.6m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$1.0m. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$5.2m.

As you can see, Jeremy Thigpen is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Transocean Ltd. is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at Transocean has changed over time.

NYSE:RIG CEO Compensation, July 22nd 2019

Is Transocean Ltd. Growing?

On average over the last three years, Transocean Ltd. has shrunk earnings per share by 80% each year (measured with a line of best fit). It achieved revenue growth of 16% over the last year.

Sadly for shareholders, earnings per share are actually down, over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Transocean Ltd. Been A Good Investment?

With a three year total loss of 48%, Transocean Ltd. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared total CEO remuneration at Transocean Ltd. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

Over the same period, investors would have come away with nothing in the way of share price gains. This analysis suggests to us that the CEO is paid too generously! So you may want to check if insiders are buying Transocean shares with their own money (free access).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.